S’pore has more US investments than China-Japan combined, Government & Economy

Thu, Sep 28, 2017 – 5:50 AM


US multinational corporations have more money sunk into Singapore than in China and Japan combined, according to the latest data released by the US Department of Commerce.

And US MNCs are still investing in factories and offices here, though not so much through fresh capital injection than ploughing back the returns of their investments.

A recent issue of the Survey of Business, a publication of the Department of Commerce’s Bureau of Economic Analysis (BEA), reported that the book value of US direct investments in the Asia-Pacific region rose US$43.4 billion (5.4 per cent) from 2015 to a cumulative US$846.68 billion in 2016. The single biggest jump – US$10.1 billion – was seen in Japan.

The next biggest increases were in Singapore – US$8.1 billion – and China – US$8.0 billion, both driven by reinvestment of earnings.

“In Singapore, reinvestment of earnings was concentrated in wholesale trade, manufacturing and finance and insurance, whereas in China it was concentrated in manufacturing,” the report said.

Still, Singapore remained host to the biggest stock of US direct investments in the region – US$258.86 billion, more than in Japan (US$114.66 billion) and China (US$92.48 billion) – the world’s two biggest economies after the US – together, according to the Department of Commerce’s data.

Australia followed with US$165.35 billion, ahead of Japan, Hong Kong came in at US$65.63 billion and India US$32.94 billion.

Globally, the stock of US direct investments abroad jumped 5.6 per cent in 2016 to US$5,332 billion, lower than the 8.2 per cent average for 2006-2015.

“The growth in 2016 reflected direct investment financial transactions outflows of US$280.7 billion, primarily reinvestment of earnings in equity investments and other changes in position of US$2.8 billion,” the Department of Commerce said.

US cumulative direct investments rose in three of the six major geographic areas last year: Europe (+ 8.7 per cent), Canada (+5.0 per cent) and Asia-Pacific (+5.4 per cent). US investments fell in Latin America (-3.4 per cent), Africa (-3.0 per cent) and Middle East (-1.4 per cent).

The Netherlands accounted for the biggest share of US direct investment with 15.9 per cent of the total. The UK comes next (12.8 per cent), followed by Luxembourg (11.4 per cent) and Ireland (7.3 per cent).

Singapore was the eighth largest, accounting for 4.9 per cent of total US investments.

As with US investments in most other countries, the largest slice – half – of the investments in Singapore were in holding companies that are likely to invest funds in other countries as well.

US MNCs also have a significant presence in manufacturing (US$42.53 billion), especially in the computers and electronics products segment, and finance (excluding banks) and insurance (US$21.55 billion).

Until 2015, US investments in Singapore’s manufacturing was the biggest in the region. Last year, living up to its role as the world’s factory, China overtook Singapore when US MNCs’ cumulative investments in the Chinese manufacturing sector increased to US$47.04 billion, up from US$41.47 billion in 2015.

Regionally, 30 per cent of US direct investments as of 2016 were in holding companies, 20 per cent in manufacturing, 14 per cent in finance (except banks) and insurance and 12 per cent in wholesale trade.

Worldwide, the share was 52 per cent in holding companies, 13 per cent in finance (except banks) and 13 per cent in manufacturing.

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